AMA Research are pleased to announce the publication of the 4th edition of the ‘Shopfitting Market Report – UK 2015-2019 Analysis’, which provides an overall analysis of the market and forecasts for future opportunities within the sector. The report should be of particular interest to construction professionals in the shopfitting and associated product supply chain sectors.

The UK shopfitting market was worth an estimated £3bn at manufacturer’s prices in 2014, an increase of 6% from the previous year.

Demand for shopfitting work had declined in recent years as the financial crisis affected the total value of retail sales and consumer spending. The nature of shopfitting work also changed, with low value, short-term contracts a feature of the sector. With retailers cautious about capital expenditure, project values decreased and contracts were let predominantly on a competitive basis, rather than on longer-term frameworks as was the case before the downturn. In addition, there has been greater emphasis by retailers on redecorating and giving stores a ‘refresh’, by changing interior fixtures such as lights, carpets and furniture, and by putting in new displays.

However, both retail sales and the demand for shopfitting services increased in 2013 and 2014, marking the beginning of a recovery in the consumer economy. Retailers began to exploit this increase in consumer spending by rolling out wider refurbishment programmes and upgrading existing fixtures in order to promote their brands and increase footfall.

The UK Shopfitting market is complex and highly fragmented, with a large number of suppliers undertaking a wide range of activities. The sector has seen a relatively high level of consolidation in recent years, which has led to the number of suppliers focused on shopfitting declining substantially, something which has also led to a shortage of specialists to carry out the available work. It is expected that the rate of consolidation in the sector will slow, however competition continues to be high and, with fewer opportunities on the market, shopfitters are increasingly required to provide a wider number of services.

In addition to the increased competition for work among shopfitting companies, the industry continues to face a number of challenges as retail and leisure trends evolve at a rapid pace and companies constantly re-brand and innovate to maintain their competitiveness and respond to changing consumer behaviour. The pace of convenience/discount store format roll-out programmes, changing consumer habits, shifts in fashion, shrinking retailer budgets and the challenge of shopper expectations on store design and space requirements are also impacting the sector and providing opportunities for shopfitters.

In addition, the shopfitting market continues to face the challenge of e-commerce growth, with online retail sales gaining momentum year on year and with physical store outlets contributing less to overall retail sales. However, the expected economic recovery is still likely to outweigh the threat posed by online retail sales and, whilst retailers will be keen to promote their in-store brands, encourage consumers into ‘bricks and mortar’ stores and increase footfall through improved displays.

The main procurement routes traditionally used in retail construction and refurbishment have been management contract or design and build, with both routes flexible to accommodate change. Shop-fitting and retail refurbishment has rapidly moved towards the design and build model, providing a complete package for clients, with many of the larger shop-fitting and retail contractors completing contracts under this route. Since time constraints are a major factor in many shopfitting projects, especially in the retail sector, partnering and framework agreements are also used in major roll-out programmes.

The total market for products within shopfitting applications is large and is valued at over £3bn in 2014. Key product sectors include Suspended Ceilings & Partitions, Lighting Equipment, Heating Ventilation & Air-Conditioning (HVAC), Floorcoverings, Paint and Wallcoverings, Glazing, Security Equipment, Merchandising Equipment, Electrical Accessories, Office Furniture and Bathroom and Kitchen Fittings. The buying, specification and installation of these products is undertaken by a mix of general shopfitters, specialists and main building contractors, depending on the product sector and nature of project.

The shopfitting market is largely reliant on performance of its two main end use sectors - retail and entertainment – both key areas of commercial new build. With the shopfitting market dependent on the economic environment and the rate at which the UK recovers from the downturn, demand is expected to be unevenly split across retail sectors, with the London retail fit-out market driving demand. The short-medium term opportunities for shopfitting contractors are likely to come from the value and discount retailers and the grocery convenience sector.

Going forward, between 2015 and 2019, the UK market for shopfitting is forecast to increase each year, with annual levels of growth expected to range between 4% and 6%, reflecting the projected increase in refit programmes compared with new build schemes.